Please note if you are upgrading minor version of drupal-7.21 to drupal-7.22. Then please use

drush pm-update

Prerequisite:

1. If you are upgrading from drupal 6 to drupal 7, you must be on the latest version of drupal 6 release. 2. There is a difference between update and upgrade. 3. You should have a separate directory(target) which will be the act as active drupal root directory.

Main work starts here

Site-upgrade always upgrades from the current Drupal site to an empty Drupal site. You need a site alias to show the target website.